NEW YORK — Apollo Group Inc., the country's largest for-profit school company, said Monday that it has laid off 700 full-time employees, mostly in student admissions, as enrollment drops off sharply.
In October, Apollo said it expected new students enrolling at University of Phoenix campuses to drop 40 percent in the quarter ending in November and withdrew its profit outlook for its upcoming fiscal year.
It has been expecting a steep fall-off in new students as the broader sector remains under increasing scrutiny from the Department of Education and lawmakers because of surging student loan defaults. Critics have accused schools like the University of Phoenix of using aggressive enrollment counselors to sign up students unprepared for college classes. The schools receive government-backed student aid, the bulk of their revenue, even if students eventually drop out of classes burdened with debt.
In response to the criticism and potential regulatory changes, Apollo implemented a free, three-week orientation program to weed out students unprepared for its curriculum. The Phoenix-based company also stopped paying recruitment counselors based on how many students they enroll.
A company spokesman said Monday he could not speculate if there will be more layoffs.
"This is a period of transition for us, and we're going to be very diligent about managing our costs through the transition," said spokesman Alex Clark.
The layoffs took place across the school's U.S. campuses, Clark said. As of Aug. 31, Apollo had 21,777 employees and 35,194 full- and part-time faculty. Apollo said in a regulatory filing that it expects to book charges of $5 million for the quarter ending Nov. 30 connected to the layoffs, but expects to start saving about $8 million per quarter starting in its fiscal second quarter.
A Phoenix radio station, News/Radio 92.3, first reported the layoffs on Monday citing anonymous sources.
Apollo shares fell 16 cents to close earlier at $34.30 and were up 2 cents in aftermarket trading.